Question 1

Lark enters into a contract to mine limestone in Milena's quarry,sell it,and share the profits on its sale with Milena.If the duties under this contract are discharged like those under most contracts,the duties will be

Accepted Answer

If the duties under the contract are discharged like those under most contracts, then the parties are expected to perform their duties as agreed upon. Therefore, the duties will be performed.

Question 2

Fact Pattern 
Mutual Company enters into a contract to employ Neil as an investment manager for two years.During the first year,Neil is often absent without explanation and when present fails to adequately monitor and manage Mutual's investments.
-Refer to Fact Pattern 10-A1.With respect to Mutual's duties,Neil's performance most likely

Accepted Answer

Neil's failure to perform his duties adequately and his frequent absences likely constitute a material breach of the contract, which can discharge Mutual from its obligations under the contract.

Question 3

Real Cheap Painters,Inc. ,agrees to paint Quint's house,using a particular brand of "discount" paint.Real Cheap completes the job but uses a different brand of discounted paint.This is most likely

Accepted Answer

The answer of Real Cheap Painters,Inc. ,agrees to paint Quint's...

Question 4

Refined Commodities,Inc. ,agrees to deliver ten tons of sheet metal to Select Builders Corporation.The agreement states that delivery is to be within "3" days,although the parties intend "30" days.Refined cannot convince Select to amend the contract.Refined should seek

Accepted Answer

Refined should seek reformation, which is a remedy where a court will alter the terms of a contract to match the parties' true intentions. In this case, the parties intended for the delivery to be within 30 days, but there is a mistake in the contract that states 3 days. Seeking damages would only compensate Refined for any losses suffered but would not correct the mistake in the contract. Rescission would cancel the contract entirely, which may not be desirable for Refined. Specific performance would require Select to fulfill their obligation to accept delivery, which may not be practical or possible.

Question 5

Clyde contracts with Deephole Excavation,Inc. ,to dig an agricultural pond on his farm.Deephole is to keep the excavated gravel in payment.Clyde's neighbor Eden challenges the dig as an illegal gravel pit.A court orders a halt to the dig.Clyde's contract with Deephole is

Accepted Answer

The court order to halt the dig has discharged the contract. This means that both parties are released from their obligations under the contract. Clyde is no longer obligated to provide the gravel and Deephole is no longer obligated to dig the pond.

Question 6

Damon contracts to repair the turf on a soccer field for Carousel Sports Park.Damon knows that without the repair,Carousel will have to cancel an upcoming game.Damon does not perform as promised.As consequential damages,Carousel can recover

Accepted Answer

Consequential damages are damages that are the result of a breach of contract, but are not directly related to the breach. In this case, the breach (Damon's failure to repair the turf) led to the cancellation of a game, which resulted in a loss of profit for Carousel Sports Park. Therefore, Carousel can recover the loss of profit as consequential damages. The cost of new turf or the difference between Damon's price and the actual cost of repair would be considered direct damages, which are not applicable in this scenario.

Question 7

Vacation Vistas,Inc. ,agrees to sell certain acreage to Umiko,who intends to develop a destination resort.Vacation Vistas repudiates the deal.Umiko sues Vacation Vistas and recovers damages.She can now obtain

Accepted Answer

Specific performance is not available as a remedy because the subject matter of the contract is land.

Question 8

Jane and Kelly want Lucy to replace Kelly as a party to their contract.They can best accomplish this by

Accepted Answer

A novation occurs when a new party takes over the obligations of an existing contract, essentially replacing one of the original parties. In this case, Jane and Kelly want Lucy to replace Kelly, which can be achieved through a novation. A mutual agreement to rescind would terminate the entire contract, an accord and satisfaction would be a settlement of a dispute, and an alteration of the contract would result in a modified agreement, but would not necessarily replace one of the parties.

Question 9

SFX Paintball Games,Inc. ,and Truck & Trailer Delivery Corporation sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is

Accepted Answer

The clause in the agreement provides for a predetermined amount of damages in case of a material breach which would otherwise be difficult to estimate. This is a typical example of a liquidated damages clause.

Question 10

Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Janet and sends her $250 as a down payment.When Ira sends her the rest of the price,Janet refuses to ship Ira the collection.Ira should seek

Accepted Answer

Specific performance is the best choice for Ira because the collection is unique and cannot be easily replaced. It would be difficult to determine the amount of damages, and rescission or reformation would not provide Ira with the collection he desired. Therefore, seeking specific performance would be the most appropriate course of action for Ira.

Question 11

Lester and Myrtle want to rescind their contract under which Lester sold an MP3 player for $40.To rescind the contract

Accepted Answer

Rescinding a contract means undoing the agreement as if it never happened. Thus, both parties must put each other back in the position they were in before the contract was made. This means that Lester must return the $40 and Myrtle must return the player.

Question 12

Development Associates (DA)agrees to buy five acres of land from Eastside Properties for $15,000.Eastside fails to go through with the deal on the agreed date,when the market price of the land is $17,000.DA may recover

Accepted Answer

DA may recover the difference between the agreed price and the market price which is $2,000 ($17,000 - $15,000). Therefore, the correct answer is option C. They cannot recover the full market price or the agreed price as they did not go through with the deal on the agreed-upon date.

Question 13

Dondi contracts to buy a custom espresso maker from Caffee Specialties,Inc. ,for $4,500,but Caffee fails to deliver.Dondi buys the appliance elsewhere for $5,500.Dondi's measure of damages is

Accepted Answer

Dondi's measure of damages is the difference between the contract price ($4,500) and the price paid for a substitute ($5,500), which is $1,000. In addition, he can also recover incidental damages, such as the cost of arranging for a different delivery or installation. Therefore, the best choice is B, which includes both the $1,000 in damages and incidental damages.

Question 14

Lake Port Services enters into a contract to load Max's Great Lakes barges with the cargo that Max designates.Lake Port's offer to perform,when Lake Port is ready,willing,able to do so,is

Accepted Answer

The offer made by Lake Port Services to load Max's Great Lakes barges with the cargo that Max designates is a tender. A tender is an unconditional offer to perform, which shows the willingness and ability to complete the contract.

Question 15

Fact Pattern 
Mutual Company enters into a contract to employ Neil as an investment manager for two years.During the first year,Neil is often absent without explanation and when present fails to adequately monitor and manage Mutual's investments.
-Refer to Fact Pattern 10-A1.Neil's performance is most likely

Accepted Answer

Neil's frequent absences and failure to adequately manage Mutual's investments likely constitute a material breach of his employment contract. Material breaches are significant and go to the heart of the contract, making it difficult or impossible for the non-breaching party to receive the full benefit of their bargain. Neil's poor performance may have caused Mutual to suffer financial losses or missed opportunities that could have been prevented with adequate management. As such, it is likely that his breaches are material and would entitle Mutual to terminate the contract and possibly pursue damages.

Question 16

Rural Power Utility,Inc. ,enters into a contract with Shovel Excavation Service to dig up,replace,and rebury Rural's cables in a certain location.Rural advances Shovel 10 percent of its cost.The parties rescind the contract.Shovel's refund of the payment is

Accepted Answer

Since the contract has been rescinded, Shovel is obligated to return the advance payment made by Rural. This obligation to return the payment is known as restitution. It is not a penalty or liquidated damages as there was no breach of contract.

Question 17

Safe-T Guard Services enters into a contract to secure Taylor's Business Park from vandalism and theft between 6 p.m.and 6 a.m.nightly for six months.At the end of the term,if there has been no vandalism or theft in the Park,Safe-T's performance will have been

Accepted Answer

The answer of Safe-T Guard Services enters into a contract...

Question 18

Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch.If Hollis breaches the contract,Grady's normal remedy would be

Accepted Answer

The best choice would be specific performance, which requires the breaching party to fulfill the terms of the contract as agreed. In this case, Grady would want the land that Hollis agreed to sell to be transferred to him as specified in the contract. Damages, reformation, and rescission may not be adequate remedies for specifically obtaining the 440 acres of land that Grady seeks.

Question 19

Clear Creek Corporation enters into a contract with Brightside Management Associates to manage and maintain Clear Creek's apartment complex.Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach.This is

Accepted Answer

This is a limitation-of-liability clause, because it limits the ability of either party to recover damages for a non-fraudulent or unintentional breach.

Question 20

Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term.In some states,Sunny would have to

Accepted Answer

In most states, including those that follow the common law rule of mitigation of damages, Sunny Properties would have a duty to make reasonable efforts to relet the premises in order to mitigate their damages resulting from Ray's breach of lease. This means that they would need to actively search for a new tenant and make efforts to advertise the property, in order to reduce the amount of damages they can claim from Ray. Option B is therefore the best choice.

Quiz 10: Contract Performance,breach,and Remedies